Investments in mutual funds gained traction in April, with the industry seeing an inflow of nearly Rs 1.86 lakh crore as investors parked their cash in fixed income schemes, seen as safe havens.
By the end of April, investors had pumped in funds worth Rs 185,956 crore (Rs 1.85 trillion) into several mutual fund schemes, as against an outflow of Rs 1,62,165 crore (Rs 1.62 trillion) in the previous month, a monthly report by the Association of Mutual Funds of India said.
This was mainly driven by investments in fixed income or debt funds, which saw net inflows of Rs 177,773 crore (Rs 1.77 trillion) during April.
Furthermore, liquid or money market funds, which invest in safer and short-term instruments like treasury bills, certificates of deposit and commercial paper, saw inflows worth Rs 9,275 crore (Rs 92.75 billion).
Experts said institutional and retail investors are putting their money into fixed income schemes. Volatility in the equity market also saw investors pulling out from such funds.
During April, equity funds saw outflows of Rs 1,133 crore (Rs 11.33 billion). "Some old investors are booking profits in the equity market, while some fund houses are also seeing new investors in equity schemes," L&T MF Chief Executive Sanjay Sinha said.
However, most investors stayed away from equity schemes as the debt crisis in Europe rattled global markets, which in turn spooked domestic stocks.
Balanced funds, which invest in debt and equity, saw pull outs to the tune of Rs 57 crore (Rs 570 million) during April, while funds witnessed outflows valued at Rs 49 crore (Rs 490 million).
"In May, we would continue to see the same trend in investment, as rather than rushing in with fresh investments in equity funds, investors would rather adopt a staggered approach," Sinha added.
The entire 2009-10 fiscal saw investors putting funds worth Rs 83,081 crore (Rs 830.81 billion) into various schemes, with the maximum inflow in fixed income schemes.
Analysts are of the view that investments in debt schemes would continue as banks, which are one of the largest investors in liquid funds, are currently flush with funds.
During April, the mutual fund industry saw its average assets under management (AAUM) rising to Rs 7.68 lakh crore, an increase of nearly Rs 21,000 crore (Rs 210 billion), or 2.71 per cent, over the previous month.
